U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-2864
DIVERSIFIED REALTY, INC.
(Exact name of small business issuer as specified in its charter)
Montana 81-0268110
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
128 Second Street South, Great Falls, Montana 59405
(Address of principal executive offices)
(406) 727-2600
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Outstanding at June 30, 2000
$.10 Par Value Common Stock 5,370,926 Shares
Transitional Small Business Disclosure Format (Check One): Yes ; No X
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DIVERSIFIED REALTY, INC.
INDEX
JUNE 30, 2000
Page Number
PART I
Condensed Financial Statements:
Balance Sheet
June 30, 2000 2
Statements of Income -
Six Months and Three Months Ended June 30, 2000 and 1999 3
Statements of Cash Flows -
Six Months Ended June 30, 2000 and 1999 4
Notes to Financial Statements 5
Management's Discussion and Analysis
of the Statements of Income 6
PART II
Other Information 7
Signatures 8
1
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DIVERSIFIED REALTY, INC.
BALANCE SHEET
AS OF JUNE 30, 2000
ASSETS
Current Assets
Cash $ 2,239,193
Due From Parent Company 82,067
Total Current Assets 2,321,260
Property, Plant and Equipment, Net 220,568
TOTAL ASSETS $ 2,541,828
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses $ 30,575
Income Taxes Payable 27,168
Total Current Liabilities 57,743
Stockholders' Equity
Common Stock - $.10 Par Value,
11,000,000 shares authorized,
5,375,000 shares issued 537,500
Additional Paid-In-Capital 1,929,408
Retained Earnings 18,394
Cost of Common Stock in Treasury (1,217)
Total Stockholders' Equity 2,484,085
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,541,828
See Notes to Financial Statements
2
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DIVERSIFIED REALTY, INC.
STATEMENTS OF INCOME
For The Three Months For the Six Months
Ended Ended
June 30, June 30,
2000 1999 2000 1999
Operating Revenues $ 48,563 $ 42,440 $101,642 $ 90,955
Operating Expenses 19,339 17,386 37,449 34,485
29,224 25,054 64,193 56,470
Income Tax Expense (12,500) (11,000) (27,000) (24,000)
Net Income $ 16,724 $ 14,054 $ 37,193 $ 32,470
See Notes to Financial Statements
3
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DIVERSIFIED REALTY, INC.
STATEMENTS OF CASH FLOWS
For The Six Months Ended
June 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Cash Provided By Operating
Activities $ 73,189 $ 54,811
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures Paid In Cash - (721)
Net Cash Provided (Used) By
Investing Activities - (721)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Purchases of Treasury Stock (7) (578)
Net Cash Advances
From (To) Parent Company (54,909) (31,300)
Net Cash (Used) By
Financing Activities (54,916) (31,878)
NET INCREASE IN CASH 18,273 22,212
CASH - BEGINNING OF PERIOD 2,220,920 2,132,849
CASH - END OF PERIOD $2,239,193 $2,155,061
See Notes to Financial Statements
4
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DIVERSIFIED REALTY, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
In the opinion of management, all adjustments necessary (consisting of only
normal recurring accruals) have been made to the unaudited financial
statements to present fairly the financial position as of June 30, 2000 and
the results of the Company's operations for the six months and three months
ended June 30, 2000 and 1999 and cash flows for the six months ended
June 30, 2000 and 1999.
The results of operations for the six months and three months ended
June 30, 2000 and 1999 are not necessarily indicative of the results to be
expected for the full year.
Parent -
M Corp, Great Falls, Montana owns approximately 95% of the outstanding shares
of the Company.
5
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DIVERSIFIED REALTY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE INCOME STATEMENT
June 30, 2000
A summary of the period to period changes in items included in the statements
of income is shown below.
COMPARISON OF
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
2000 AND 1999 2000 AND 1999
<TABLE>
<S> <C> <C> <C> <C>
Revenues $ 6,123 14.4% $10,687 11.7%
Expenses 1,853 11.2% 2,964 8.5%
Net Income 2,670 19.0% 4,723 14.5%
</TABLE>
Revenues increased $10,687 (11.7%) in the first six months of 2000 as
compared with the first six months of 1999 due primarily to an increase in
interest revenues ($14,578, 31.1%) partially offset by a decrease in rental
revenues ($3,971, 10.2%). Interest revenues increased primarily due
to an increase in interest-earning deposits maintained by the Company and
an increase in interest rates. Rent revenues decreased due to the sale of
rental property during the fourth quarter of 1999. Operating expenses
increased $2,964 (8.5%) in the first six months of 2000 as compared with the
first six months of 1999. The provision for income tax expense increased
$3,000, 12.5%, in the first six months of 2000 as compared with the first
six months of 1999 due primarily to the increase in pretax income.
6
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DIVERSIFIED REALTY, INC.
PART II
OTHER INFORMATION
JUNE 30, 2000
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
7
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DIVERSIFIED REALTY, INC.
Registrant
Date: August 11, 2000 s/L. Arneson
L. Arneson,
Secretary-Treasurer
Date: August 11, 2000 s/Jerry K. Mohland
Jerry K. Mohland
Accountant
8
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